Shortages of eggs, milk, and butter persist as Iran still feels sanctions

ByBill Baker, Special to The Christian Science MonitorFebruary 18, 1981

Almost a month after the freeing of the American hostages, Iran still is suffering from the effects of the economic sanctions imposed by some Western nations and Japan during the crisis.

The shortages that began to be felt some months after the sanctions were imposed still have not ended. Said one bazaar merchant, "I think the shortages will remain so long as the war [between Iran and Iraq] continues."

Still in short supply are such everyday items as eggs, milk, butter, cooking oil, washing powder, soap, meat, and sugar. The government of Prime Minister Muhammad Ali Rajai has had to continue its policy of rationing many of these items.

One grocer, however, put part of the blame for the shortages on the sense of panic among the people themselves. "There's plenty of milk and butter to go around," he said, "but people don't let them remain in the shops. As soon as they arrive here, people buy them up immediately."

A Commerce Ministry official confirmed this view. "There are no real food shortages. We have bought enough of everything we need," he said.

But the shortages do not extend to the needs of the housewife alone. One Tehran carpenter said, "We can't get paints and varnishes easily. They come in only sporadically and then we've got to wait in line for hours before we can get what we want."

The shortages bring strong inflationary pressures on the market. The carpenter continued, "Paint thinner, which used to cost 7,000 rials a barrel [ about $100 at the official rate], now costs 30,000 rials -- if it is available."

Merchants in Tehran's bazaar attribute the shortages to several factors, principally the war with Iraq and the government's interference in foreign trade.

"Our principal port, Khorramshahr, has been destroyed. We are trying to get our goods through a second-rate port, Bandar Abbas. But, of course, it can't fill the bill.

"Then there's the security problem in the region as a whole and the Gulf in particular. Ships are simply afraid to come here, and the insurance rates are very high are calling at Bandar Abbas, but very few."

Another importer explains that the current situation has affected the overland trade at Adersely as well. "Trucking companies bringing goods from Europe used to charge us $70 a ton about a year ago. Now they are demanding $ 350 per ton. They say it just isn't safe to come to Iran any longer. It's not the war alone that bothers them. It's the security situation in general.

"Our company was importing medicines. We've stopped importing them now. We've waiting for the situation to improve before we begin again."

The bazaar merchant put part of the blame for shortages on the government's plan to nationalize foreign trade. "About 90 percent of Iran's needs are imported and the rest are manufactured internally," he said. "Now the government wants us to do the importing and then hand over 30 percent of our goods to them to be sold in consumer cooperatives.

"In other words, they want to use our expertise and experience in the international market while they take the credit. Well, many bazaaris won't play the game. They won't import."

Another bazaar merchant offered another explanation for the shortages. "The country has run out of foreign exchange reserves," he said. "The government has had to cut down on what it considers to be unnecessary and luxury items. It does not allow importers to open letters of credit for these items. This in turn pushes up the prices of the stocks still available and adds to the inflationary spiral."

President Bani-Sadr disclosed in his speech Feb. 11 that despite the unfreezing of Iran's assets in US banks the country's foreign exchange reserves were slim.

"It is feared the foreign exchange reserves by the end of the [Iranian] year [on March 20] will be less than $1 billion compared with $10 billion last year," he said.

At the same time, however, five Japanese banks announced Feb. 17 that they had reopened offices in Tehran in anticipation of more trade and financial transactions between Iran and Japan. Trade between the two countries totaled just over $1 billion in March last year before a pricing dispute halted oil shipments to Japan.

Now Iran has resumed its oil exports to the rest of the world; they are believed to be in the region of 1 million barrels a day. At the present rate of month in foreign exchange.

One Cabinet minister bragged, "We are now exporting more oil than we did before the war started."

Oil Ministry officials refused to confirm this or to release any statistics about Iran's oil production and exports. Privately admit production has picked up; it had fallen to zero shortly after the war with Iraq started.

Motorists also are still facing difficulties. "I just paid 1,800 rials [$25] for a 15-liter gasoline coupon on the black market," said one driver. "That comes to 150 rials [$2] a liter." (That would be a 15-fold increase over gasoline prices just five months ago.)

But the government has become a bit more liberal in gasoline rationing, allowing 60 liters a month now, compared to 30 liters just af ter the war started.